Whilst the area has attracted regulatory concern, the booming market can provide great certainty and flexibility for firms.
Daniel Spendlove, partner at Signature Litigation, commented:
“The huge growth seen in the private credit market is a product both of demand and supply. All of the signs suggest that it will remain a priority asset class for major capital providers. As the market grows, and as a more diverse class of capital providers enter the market, increased regulatory scrutiny will inevitably follow, as will litigation risk. In addition to the inherent risk of defaulting loans, we may start to see underperforming portfolios generating civil claims, including against fund managers, fund administrators, asset valuers and advisers. The more traditional private equity structures are, by comparison, less prone to such disputes.”